Unfv. ©fill.  Library 
51 

3431 

ARGUMENT 


Committee  of  Commerce 


Oak  Street 
UNCLASSIFIED 

L i 


OF  THE 


SENA  TE  OF  THE  UNITED  ST  A TES , 


ON  THE 


REAGAN  BILL, 

FOR  THE 


REGULATION  OF  INTER-STATE  COMMERCE, 


ALBERT  FINK. 


Washington,  February  11,  1879. 


New  York: 

Russell  Brothers,  Printers,  17,  19,  21  & 23  Rose  Street. 


Mr.  Chairman: 


The  first  and  second  sections  of  the  Reagan  Bill  provide 
that  the  rate  of  railroad  transportation  shall  be  the  same  to  all 
persons  for  like  service,  and  that  no  rebate,  drawback,  or  other 
advantage  in  any  form,  shall  be  given  to  any  person.  The 
object  of  this  bill  is  to  secure  to  all  shippers  in  the  country 
reasonable,  equitable,  and  permanent  rates  of  transportation,  and 
to  avoid  unjust  discrimination  not  only  between  the  individual 
shippers  at  the  same  locality,  but  also  between  the  shippers,  at 
different  localities.  If  this  object  can  be  attained,  then  this  bill 
ought  to  have  the  cheerful  support  of  every  citizen,  be  he  mer- 
chant, manufacturer,  miner  or  agriculturist,  railroad  proprietor  or 
railroad  manager ; it  would  at  once  solve  one  of  the  most  compli- 
cated and  difficult  problems  that  has  engaged  the  attention  of 
the  best  minds  of  all  countries  during  the  past  half  century. 
Does  this  bill  solve  that  problem  ? 


NO  PROVISION  IS  MADE  FOR  THE  ENFORCEMENT  OF  A JUST 
AND  UNIFORM  TARIFF. 

In  the  first  two  sections  the  bill  simply  reasserts  the  principle 
that  has  always  been  recognized  in  the  common  law  of  the 
country  governing  common  carriers,  but  has  hardly  ever  been 
enforced  in  practice.  Does  this  present  bill  make  any  provision 
for  carrying  this  principle  into  practical  execution  in  such  a 
» manner  as  to  remedy  the  existing  evils  which  have  arisen  -from 
■2  a violation  of  the  common  law,  and  which  this  bill  is  intended 
M to.correct?  In  my  opinion  it  does  not.  After  the  Reagan  bill 
J has  become  a law,  we  have  no  assurance  whatever  that  there 
shall  be  no  longer  any  discrimination  or  differences  in  rates  for. 
/ ^ like  service  performed  to  persons  at  the  same  locality,  nor  does 
ya  insure  that  like  rates  of  transportation  shall  be  maintained 
3 with  any  degree  of  permanency,  or  that  the  rates  from  different 
localities  shall  be  so  adjusted  as  not  to  be  unjustly  discriminat- 
tfC&ig. 

-y  Take  for  example  the  five  roads  terminating  at  Chicago, 
V^engaged  -in  carrying  the  traffic  from  there  to  the  seaboard.  Road 
j'"  • No.  1 establishes  to-day  a rate  of  40  cents  per  100  lbs.  from 
Chicago  to  New  York  ; Road  No.  2 may  make  to-morrow  a rate 
of  35  ; Road  No.  3 the  next  day  a rate  of  30  cents,  and  Road 


J 


4 


No.  4 on  the  following  day  a rate  of  25 ; and  the  fifth  Road  on 
the  fifth  day  a rate  of  20  cents.  This  may  be  done  when  the 
Reagan  bill  is  in  force,  as  it  is  done  now  without  it.  The  ship- 
pers on  the  fifth  day  may  have  to  pay  only  one -half  the  rate 
paid  by  the  shipper  who  is  obliged  to  ship  on  the  first  day.  The 
bill,  therefore,  does  not  secure  uniformity  and  permanency  of 
rates  of  transportation  to  the  shippers  from  the  same  locality  for 
like  service,  as  it  is  expected  to  do.  Neither  does  it  secure  to 
shippers  from  different  localities  equitable,  permanent  and  non- 
discriminating  rates.  What  assurance  is  there  that  the  rates 
from  St.  Louis  to  New  York,  which  ought  to  be  higher  than  the 
rates  from  Chicago,  on  account  of  its  greater  distance  from  New 
York,  may  not  be  lower  than  the  rates  from  Chicago,  at  the 
same  time  ? They  may  be  40  cents  from  Chicago  to  New  York 
when  they  are  only  25  cents  from  St.  Louis.  What  is  there  to 
hinder  it  ? Is  there  any  provision  in  the  Reagan  bill  that  pro- 
hibits this  unjust  discrimination  ? The  fourth  section  of  the 
bill  evidently  was  intended  to  have  that  effect.  But  have  not 
the  Chicago  roads  under  this  bill  the  right  to  make  any  rate  they 
please  from  Chicago,  and  have  not  the  St.  Louis  roads  the  right 
to  make  any  rate  they  please  from  St.  Louis  ? These  roads  are 
independent  of  each  other.  How  then  is  the  object  of  the 
fourth  section  of  the  bill,  which  is  intended  to  secure  to  ship- 
pers at  different  places  non-discriminating  rates,  to  be  carried 
into  practice  ? As  the  bill  now  stands  it  cannot  be  carried  out. 

PRINCIPLE  UPON  WHICH  PRESENT  RAILROAD  TARIFFS 
ARE  BASED. 

It  is  the  practice  of  competing  railroad  companies  to  establish 
at  all  places  where  they  come  in  competition  a joint  tariff, 
according  to  which  the  rates  are  made  the  same  to  all  persons 
for  like  service,  and  to  adjust  the  tariff  from  the  different  locali- 
ties, to  each  other,  upon  the  mileage  basis — that  is,  according  to 
the  distance  of  the  localities  from  the  common  points  to  which 
shipments  are  made,  or  nearly  so. 

The  rates  that  are  established  by  agreement  from  Chicago  to 
New  York  form  the  basis  of  all  rates  from  every  point  in  the 
territory  east  of  the  Mississippi,  north  of  the  Ohio  River  and 
the  seaboard.  The  rate  from  East  St.  Louis  is  made  exactly  six- 


teen  (16)  per  cent,  more  than  the  rate  from  Chicago  to  New  York, 
because  St.  Louis  is  sixteen  (16)  per  cent,  further  than  Chicago 
from  New  York.  From  Indianapolis  the  rate  is  made  nine 
(9)  per  cent,  less,  also  according  to  distance,  and  so  on. 

There  can  be  no  principle  more  correct  than  the  one  upon 
which  the  transportation  tariffs  of  the  country  are  now  based  ; 
Congress  could  not  suggest  a better  one.  Under  its  operation 
the  fourth  section  of  the  Reagan  bill,  according  to  which  freight 
shall  not  be  carried  at  a greater  cost  over  short  distances  than  it 
is  carried  over  longer  distances,  would  be  fully  carried  out  from 
all  competitive  points:  No  serious  difficulty  is  experienced  by 
the  competing  railroad  companies,  in  the  country  in  agreeing 
upon  and  establishing  tariffs  entirely  satisfactory  to  the  commer- 
cial community  and  to  the  people.  An  examination  of  the 
tariffs  that  have  from  time  to  time  been  established  would  show 
that  they  are  based  upon  principles  recognized  by  all  commer- 
cial men  as  correct,  and  fully  in  accordance  with  the  laws  govern- 
ing common  carriers.  The  evils  which  the  Reagan  bill  wants  to 
remedy  do  not  arise  from  defective  or  badly  constructed  tariffs, 
but  they  arise  from  the  failure  to  carry  these  well  devised  tariffs 
into  execution,  and  here  lies  the  whole  difficulty  of  the  transport- 
ation problem. 

WHY  ARE  THESE  ESTABLISHED  TARIFFS  NOT  ENFORCED? 

These  tariffs  are  not  enforced  simply  because  each  of  the 
many  competing  railroad  companies,  after  having  agreed 
to  maintain  a joint  competitive  tariff,  is  left  at  liberty  to 
depart  from  it  whenever  it  pleases.  If  a company  hopes 
to  secure  a few  additional  tons  of  freight  by  a rebate  or  a 
drawback,  it  pays  it  in  violation  of  its  voluntarily  assumed 
obligation  to  adhere  to  the  tariff.  This  action,  although  in- 
tended to  be  secret,  is  discovered  by  the  watchful  eyes  of 
its  competitors  and  might  as  well  have  been  taken  openly 
as  it  will  have  to  be  hereafter,  if  the  Reagan  bill  becomes 
a law.  No  sooner  is  the  agreed  tariff  departed  from  by 
any  one  of  the  many  competitors,  than  all  the  others  follow,  as 
they  necessarily  must.  The  consequence  is  that  the  properly 
constructed  tariff  falls  to  pieces  from  the  touch  of  a single 
hand  like  a house  of  cards.  Where  before  there  was  a 
symmetrically  arranged  structure  there  is  now  nothing  but  a 


confused  heap  of  the  material  with  which  it  was  constructed 
Where  before  equal  rates  were  charged  to  all  persons  for  the 
same  service,  and  where  proper  relations  existed  between  the 
tariff  of  all  commercial  communities,  avoiding  unjust  discrimina- 
tion between  individuals  or  communities,  there  is  now  nothing 
but  chaos,  each  man  at  every  place  has  now  his  own  tariff  and 
his  own  classification,  regardless  of  what  other  parties  have. 
The  rates  are  changed  from  day  to  day — even  from  hour  to  hour ; 
the  through  rates  are  lowered,  while  the  local  rates  remain  com- 
paratively high. 

When  by  this  process  the  rates  have  become  as  low  as  they 
possibly  can  go,  the  railroad  .managers  meet  and  with  one  stroke 
of  the  pen  the  rates  are  raised  at  once  from  the  lowest  depth  to 
the  highest  pitch — say  from  a 15-cent  rate  from  Chicago  to  New 
York  to  a 40- cent  rate.  Thus  are  produced  all  the  evils  which 
the  Reagan  bill  proposes  to  remedy.  They  follow  as  the  natural 
consequence  of  the  action  of  perhaps  a single  railroad  manager, 
at  whoso  mercy,  or  whim,  or  selfishness,  the  people  of  the  whole 
country  are  made  to  suffer — not  only  those  who  use,  but  also 
those  who  own  the  railroads.  It  is  a wonder  that  the  people 
have  allowed  this  abuse  to  go  on  so  long. 

Will  the  Reagan  bill,  if  it  becomes  a law,  put  a stop  to  it.?  It 
will  not.  The  bill  makes  no  provision  that  reaches  the  root  of 
the  evil.  It  makes  no  provision  for  the  establishment  and  main- 
tenance of  a just  and  properly  constructed  tariff.  It  does  not 
restrict  any  of  the  numerous  railroad  companies  from  making 
at  any  time,  each  for  itself,  whatever  rate  it  chooses  to  make, 
regardless  of  the  rate  that  may  be  made  by  its  competitor  in  the 
same  city  or  in  distant  markets. 

As  long  as  this  liberty  is  not  restricted,  and  the  Reagan  bill 
does  not  restrict  it,  no  security  whatever  is  offered  to  the  public 
that  the  same  confusion  of  tariff,  the  same  unjust  discrimination 
between  shippers  in  the  same  locality,  and  the  same  violent 
fluctuation  in  rates,  will  not  take  place  with  all  the  attending 
evils,  after,  as  well  as  before,  the  Reagan  bill  becomes  a law. 

The  fact  that  one  and  the  same  line  of  transportation  can, 
under  the  Reagan  bill,  make  only  one  rate  to  shippers  from  the 
same  locality  for  like  service  during  five  consecutive  days,  does 
not  insure  that  some  other  line  will  not  make  a different  rate; 
the  effect  of  which  is  precisely  the  same  as  if  the  same  line 


7 


of  transportation  could  make,  as  it  now  does,  different  rates  for 
like  service  to  different  shippers,  and  this  is  exactly  what  the 
Reagan  bill  wants  to  prevent. 

A FEATURE  OF  THE  BILL  THAT  MAY  WORK  SOME  IMPROVE- 
MENT BY  INDIRECTIONS. 

There  is,  however,  one  feature  of  the  Reagan  bill  that  may 
possibly  work  some  good,  but,  unfortunately,  only  by  indirec- 
tion, and  in  spite  of  the  spirit  and  declared  object  of  the  bill. 
The  reductions  of  tariff  which  are  now  generally  made  secretly 
would  hereafter  have  to  be  made  openly ; this  is  tbe  only  dif- 
ference between  the  method  now  in  use  and  the  one  proposed 
by  the  Reagan  bill.  The  provision  of  the  bill,  according  to 
which  the  tariff  has  to  be  published  five  days  in  advance  of  its 
going  into  effect,  will  have  the  tendency  to  consolidate  the  pres- 
ent loose  combinations  between  railroad  companies  in  establish- 
ing their  joint  competitive  tariffs,  and  the  penalty  imposed  for 
a violation  of  the  published  tariffs,  will  enable  the  roads  to 
maintain  the  tariffs  more  permanently  than  they  could  do  with- 
out this  restraint.  In  this  respect  the  Reagan  bill  will  work  an 
improvement,  but  this  result  is  by  no  means  certain. 

Suppose,  for  example,  that  after  an  agreement  to  maintain  cer- 
tain tariff  rates  from  Chicago,  any  one  of  the  numerous  routes 
from  Chicago  to  New  York — and  there^are  some  fifteen — finds 
that  it  cannot  secure  any  business,  or  not  as  much  as  it  thinks 
it  ought  to  have,  it  will  give  notice  to  the  other  roads  that  in  five 
days  its  tariff  will  be  reduced.  This  will  at  once  destroy  the  equali- 
ty of  rates  unless  the  other  roads  make  similar  reductions,  and  if 
they  do,  then  the  permanency  of  rates  will  be  destroyed.  How- 
ever, the  practical  result  most  likely  will  be,  that  in  order  to 
prevent  the  general  reduction  in  rates,  the  roads  will  agree  to  let 
the  dissatisfied  road  have  a certain  proportion  of  the  business 
by  permitting  it  to  lower  its  rate  to  a certain  extent,  while  the 
other  roads  keep  up  theirs  until  the  agreed  additional  tonnage 
has  been  thrown  upon  the  road  that  could  not  get,  under  equal 
rates,  a satisfactory  share  of  the  business.  The  method  is  pre- 
cisely the  same,  in  effect,  as  the  pooling  of  the  business,  which 
latter  is  forbidden  by  the  bill.  There  is  no  law,  however,  which 
forbids  a road  to  lower  its  rates,  nor  is  it  likely  that  such  a law 
would  be  enacted,  and  hence  the  provision  of  the  bill  according 


8 


to  which  no  pooling  is  to  be  allowed,  can  be  readily  evaded,  like 
all  laws  that  are  not  properly  considered. 

The  fact  is,  that  the  objects  of  the  Reagan  bill  can  only  be 
attained  by  the  process  which  T have  just  described,  no  matter 
by  what  name  it  may  be  called,  although  it  is  in  direct  violation 
of  the  provision  and  the  spirit  of  the  bill.  All  the  good  that 
the  bill  can  possibly  accomplish  must  be  accomplished  by  indi- 
rection. I take  for  granted  that  this  is  not  the  proper  method 
in  which  the  American  people  want  to  deal  with  so  important 
a subject. 

WARFARE  AND  COMPETITION  BETWEEN  RAILROAD  COMPANIES 
MUST  BE  RESTRICTED. 

It  ought  to  be  understood  and  frankly  acknowledged  that  in 
order  to  carry  out  the  object  of  the  Reagan  bill  it  is  absolutely 
necessary, 

First — That  all  the  railroad  companies  competing  with  each 
other  must  agree  upon  a joint  competitive  tariff,  the  same 
by  all  routes  between  the  same  termini,  and  equitably  adjusted  as 
between  all  competing  points  in  the  country  so  as  to  secure  to 
the  shippers  the  same  rates  for  like  service,  and  to  the  different 
communities,  just  and  non-discriminating  rates. 

Second — That  a tariff  so  arranged  must  be  strictly  adhered  to 
by  all  competing  roads,  until  it  is  changed  again  in  the  same 
manner  and  upon  the  same  principles  as  that  upon  which  it  was 
first  established. 

It  is  only  in  this  way,  and  in  no  other,  that  the  object  of  the 
Reagan  bill  can  be  carried  into  practical  execution,  and  that  a 
stop  can  be  put  to  the  existing  evils. 

These  measures,  of  course,  cannot  be  carried  out  without  re- 
stricting, to  a certain  extent,  the  competition  between  the  indi- 
vidual transportation  companies,  and  for  this  reason  Congress 
may  be  afraid  to  put  them  in  operation;  but  it  might  as  well  be 
attempted  to  mix  fire  and  water  into  a homogeneous  mass  as  to 
attempt  to  secure  to  the  people  of  this  country  the.  maintenance 
of  an  equitable  and  just  transportation  tariff,  and  at  the  same 
time  leave  the  competition  between  the  transportation  companies 
as  it  now  is — unrestricted  by  any  law.  The  existence  of  one 
condition  of  affairs  excludes  the  existence  of  the  other. 


9 


The  question  for  Congress  to  decide,  is,  which  will  they  have  ? 
If  it  be  decided  that  the  present  method  of  competing  between 
railroad  companies  is  beneficial  to  the  public,  then,  the  people 
must  accept  with  it  all  the  attending  evils ; and  if,  upon  the  other 
hand,  it  is  admitted  that  the  present  evils  of  the  transportation 
business  are  unendurable,  then  the  proper  remedy  is  to  restrict 
the  competition  or  warfare  as  it  now  exists  between  the  railroad 
companies. 

I am,  of  course,  an  advocate  of  the  latter  proposition,  believing 
that  it  will  be  to  the  interest  of  the  public  that  there  should  be  a 
proper  and  just  tariff  maintained,  and  that  all  unjust  discrimina- 
tions should  be  eliminated  from  the  transportation  business.  I 
am  aware  that  there  will  be  great  objection  raised  to  any  measure 
looking  to  the  restriction  of  competition,  for  fear  that  the  rates 
of  transportation  would  thereby  be  increased.  I believe  this  fear 
to  be  entirely  without  foundation,  knowing  that  it  is  impossible 
to  eliminate  from  the  transportation  business,  all  elements  of 
legitimate  competition,  and  that  it  is  only  a species'of  competition, 
of  a very  unhealthy  character,  that  must  necessarily  be  restricted, 
in  order  to  carry  out  the  objects?  of  the  Reagan  bill. 

WHAT  CONSTITUTES  HEALTHY  AND  UNHEALTHY  COMPETITION 
— THE  LATTER  TO  BE  RESTRICTED. 

It  will  be  necessary  to  explain  what  I mean  by  healthy,  per- 
manent and  legitimate  elements  of  competition  which  enter  into 
the  construction  of  railroad  tariffs,  and  what  are  the  incidental 
secondary  elements,  which  act  not  only  spasmodically  and  without 
law,  but  simply  according  to  the  whims  or  selfishness  of  railroad 
companies,  and  which  work  so  much  mischief  to  the  public, 
as  well  as  to  the  railroad  companies  themselves. 

When  competing  railroad  companies  establish  a joint  competi- 
tive tariff,  they  take  into  consideration  all  the  legitimate  elements 
of  competition  that  may  have  a bearing  upon  the  tariff,  and 
these  are  many.  Thus,  in  establishing  the  rates  from  Chicago  to 
New  York,  they  will  consider  the  lake  and  canal  competition, 
and  determine  their  own  rates  in  such  a way  as  to  secure  a 
reasonable  share  of  the  business  against  these  competitors. 
It  will  be  admitted  that,  between  water  competition  and  rail 
competition  there  can  be  no  permanent  combination.  Now, 

2 


10 


considering  further  that  the  rate  from  Chicago  to  New  York 
controls  the  rates  all  over  the  country,  yiz.  : the  rates  from  St. 
Louis,  Indianapolis,  Louisville,  Columbus,  etc.,  to  New  York, 
and  that  the  rates  from  these  places  to  New  York  govern  again 
the  rates  from  the  same  places  to  Boston,  Philadelphia  and  Bal- 
timore, it  will  appear  that  the  rates  of  transportation  throughout 
this  great  territory,  and  to  and  from  all  places  beyond  the  points 
named,  are  controlled  and  influenced  by  the  competition  with 
the  lakes  and  the  Erie  Canal. 

It  may  be  said  that  this  is  true  only  during  the  season  of  navi- 
gation, and  that  in  winter  the  railroads  might,  by  combination, 
exercise  absolute  control  over  the  rates.  There  are,  however, 
many  other  influences  at  work,  which  are  constantly  controlling 
railroad  managers  in  the  formation  of  their  competitive  tariffs. 
Thus  in  the  winter  time,  when  the  lake  and  canal  navigation  is 
closed,  the  rates  from  Chicago  to  New  York  would  be  influenced 
by  the  lower  water  rates  from  St.  Louis  to  New  Orleans.  Were 
the  managers  of  the  Chicago  or  St.  Louis  roads  inclined  to  charge 
exorbitant  rates,  they  would  soon  find  that  traffic,  would  be 
diverted  to  St.  Louis  and  down  Jhe  Mississippi  River.  Even  if 
there  were  no  Mississippi  River,  other  considerations  would  influ- 
ence the  rates  of  transportation  from  Chicago  to  New  York.  If 
these  rates  were  made  too  high  during  the  winter  months,  only  a 
small  amount  of  the  grain  crops  of  the  West  would  be  marketed 
during  that  time ; grain  would  be  stored,  awaiting  the  opening 
of  navigation. 

In  most  cases  it  is  only  a question  of  interest  upon  the  capital 
invested,  whether  to  keep  the  grain  in  store  for  a few  months, 
and  ship  after  the  opening  of  navigation  at  lower  rates,  or  to 
ship  immediately  at  the  higher  rates.  If  railroad  companies 
were  to  charge  much  more  than  the  cost  of  water  transportation, 
plus  the  interest  on  the  capital  invested  and  plus  the  cost  of 
storing  the  grain,  a considerable  portion  of  the  grain  shipments 
would  be  withheld  until  the  opening  of  navigation. 

In  addition  to  all  these  influences,  the  market  value  of  grain 
in  Europe,  and  the  competition  with  other  sources  of  supply 
from  other  countries,  influence  the  rates  of  transportation  from 
the  West. 

I refer  to  these  various  elements,  that  always  are  and  must  be 
considered  in  establishing  railroad  tariffs,  for  the  purpose  of 


11 


explaining  what  I mean  when  I assert  that  legitimate  competi- 
tion cannot  be  eliminated  by  any  combination  between  railroad 
companies. 

Although  referring  here  only  to  a special  case — the  tariffs 
from  the  West  to  the  East — it  can  be  demonstrated  that  the  same 
or  similar  influences  exist  in  all  cases,  at  least  in  this  country, 
where  the  navigable  rivers,  lakes  and  ocean  afford  cheap 
means  of  transportation  and  a complete  check  on  any  attempt 
of  railroad  managers  to  charge  exorbitant  rates. 

I will  now  explain  what  I understand  by.  the  species  of  com- 
petition which  must  be  eliminated,  if  the  object  of  the  Reagan 
bill  is  to  be  attained.  When  the  transportation  lines  from  Chi- 
cago and  all  other  points  to  the  East  have  agreed  upon  a joint 
tariff  and  properly  adjusted  rates  of  transportation,  after  taking 
fully  into  consideration  the  legitimate  elements  controlling  the 
competitive  rates,  then  the  contest  generally  commences  between 
• these  various  lines  themselves  as  to  the  quantitjr  of  the  total 
competitive  business  that  each  is  to  carry.  And  it  is  in  conse- 
quence of  this  contest  that  the  well  devised,  just  and  proper 
tariffs  of  transportation  are  sacrificed  and  all  the  evils  which  the 
Reagan  bill  intends  to  remove  are  developed. 

METHODS  AS*  NOW  PRACTICED  BY  RAILROAD  COMPANIES  TO 
CARRY  OUT  THE  OBJECT  OF  THE  REAGAN  BILL. 

The  methods  that  have  been  proposed  for  the  purpose  of 
avoiding  this  sort  of  competition,  by  the  railroad  companies 
themselves  (and  they  are  just  as  anxious  to  see  the  object  of  the 
Reagan  bill  carried  out  as  the  public),  contemplates  that  the  traffic 
from  competing  points  be  apportioned  between  the  competitors, 
satisfactorily  to  the  parties  in  interest,  in  order  thus  to  remove 
all  motive  for  paying  rebates  and  drawbacks,  and  to  prevent  the 
frequent  changes  in  rates.  So  far,  where  such  arrangements 
have  been  made  and  faithfully  carried  out,  it  has  been  possible  to 
secure  to  the  people  like  rates  for  like  service.  This  method,  gen- 
erally known  under  the  name  of  pooling  (a  misnomer),  is  to  be  for- 
bidden by  the  Reagan  bill,  although  it  is  the  only  one  by  which 
the  object  of  that  bill  can* be  carried  into  practical  execution. 

Fully  impressed  with  the  necessity  of  reform  in  the  trans- 
portation business,  both  in  the  interests  of  the  people  as  well  as 


12 


in  the  interests  of  the  railroad  companies,  I have  myself  for  the 
last  three  years  endeavored  to  induce  the  railroad  companies,  by 
voluntary  action  and  organized  co-operation,  to  adopt  such  meas- 
ures as  are  absolutely  necessary  to  practically  secure  the  object 
of  the  Reagan  bill ; but  I am  free  to  say  that  these  efforts,  so  far, 
have  been  only  partially  successful.  It  is  my  opinion  that  the 
objects  of  the  Reagan  bill  cannot  be  secured  except  by  the  aid 
of  Congress — not,  however,  in  the  way  proposed  by  this  bill. 
A much  simpler  law  would  accomplish  the  purpose. 

PROPOSED  AMENDMENTS. 

The  opponents  of  the  bill  have  been  reproached  for  having 
failed  to  offer  substitutes  that  would  remove  their  objections  to 
the  bill.  This  makes  me  venture  to  suggest  an  amendment  to 
the  bill,  viz.:  To  strike  out  every  section  after  the  second,  except 
such  as  provide  merely  for  the  machinery  by  which  the  bill 
is  to  be  carried  out,  and  then  add  the  following : 

Sec.  3.  That  all  competing  railroad  companies  shall  jointly 
establish  a tariff  from  all  competing  points. 

Sec.  4.  That  the  tariff  so  established  shall  be  submitted  to 
a Commission  of  Experts  appointed  by  the  Federal 
Government,  and  if  they  find  that  the  tariff  is  just  and 
equitable,  and  based  upon  correct  commercial  princi- 
ples, and  not  in  violation  of  the  common  laws  govern- 
ing common  carriers,  then  such  tariff  shall  be  approved, 
and  shall  become  the  law  of  the  land  until  changed  in 
the  same  manner  by  the  same  authority. 

Sec.  5.  In  cases  where  railroad  companies  cannot  agree 
upon  such  tariffs,  or  upon  any  other  questions  such  as 
might  lead  to  a war  of  rates  between  railroad  com- 
panies, the  questions  of  disagreement  shall  be  settled 
by  arbitration,  the  decision  of  the  arbitrator  to  be 
enforced  in  the  United  States  Courts. 

I merely  desire  to  express  the  general  principle  that  should  be 
embodied  in  the  Reagan  bill  without  going  into  details,  which  I 
think  it  will  not  be  difficult  to  arrange.  Nor  will  I detain  the 
Committee  with  urging  the  many  reasons  which  lead  me  to 


13 


believe  that,  with  the  foregoing  amendments,  the  object  of  the 
Reagan  bill  could  be  fully  carried  out,  and  that  without  some 
such  provision,  it  will  be  impossible  to  do  so. 

In  offering  the  above  amendment  to  the  Reagan  bill,  it  is 
proper  to  say  that  I do  so  on  my  own  responsibility,  and  without 
having  consulted  any  railroad  managers  or  proprietors.  To 
what  extent  these  amendments  would  meet  their  approval,  I am, 
therefore,  not  prepared  to  say. 

In  concluding  this  portion  of  my  argument,  I will  mention 
that  in  Germany  the  railroad  tariffs  are  established  in  a way 
similar  to  that  proposed.  They  are  prepared  first  by  each  sepa- 
rate company  ; then  the  various  competing  companies  meet  in 
counsel  and  arrange  a joint  tariff,  which  is  submitted  to  the 
government,  and  when  approved  it  becomes  the  tariff  of  the 
country,  and  cannot  be  changed  except  by  the  same  process  by 
which  it  was  established. 

The  difficulty  of  the  railroad  problem  in  Germany  does  not 
arise  from  a want  of  carrying  out  the  established  tariffs,  but 
from  the  fact  that  so  many  small  and  separate  interests  cannot 
readily  agree  upon  a joint  tariff,  especially  as  the  business  has  to 
be  transacted  there  upon  the  circumlocution  principle.  This 
difficulty  could  only  be  overcome  by  adopting  a provision  simi- 
lar to  section  5 of  the  proposed  amendment,  and  for  the  want  of 
which  the  railroad  problem  in  Germany  is  just  as  troublesome 
as  it  is  here. 

In  this  country  the  practical  sense  of  the  railroad  managers  has 
long  ago  established  a quick  and  ready  method  of  making  tariffs, 
and  there  are  now  in  existence  properly  constructed  tariffs  for 
all  parts  of  the  country  that  can  readily  be  changed  to  suit  the 
commercial  exigencies.  The  difficulty  is  that  these  tariffs  are 
not  being  maintained.  And  it  is  not  in  the  power  of  any  one 
or  a great  number  of  railroad  companies  to  adhere  to  them, 
simply  because  it  requires  the  cooperation  of  all  competing  lines , 
without  exception , to  accomplish  that  result.  This  necessary 
co-operation,  I am  convinced,  can  be  secured  only  by  the  author- 
ity of  Congress,  under  some  such  legislation  as  I have  above 
suggested. 

Having  considered  the  fundamental  principles  of  the  Reagan 
bill,  I will  now  refer  to  some  of  its  other  features. 


14 


CONTINUOUS  SHIPMENTS  CANNOT  BE  ENFORCED,  HENCE  THE 

OBJECTS  OF  .THE  REAGAN  BILL  CANNOT  BE  CARRIED  OUT. 

The  Reagan  bill  applies  only  to  property  which  is  carried 
continuously.  It  forbids  railroad  companies  entering  into  “ any 
combination  contract  or  agreement,  by  changes  of  schedule 
carriage  in  different  cars,  breaking  car  loads  into  les§  than  car 
loads,  with  intent  to  prevent  the  carriage  of  such  property 
from  being  continuous.” 

In  considering  this  provision  of  the  bill,  it  ought  to  be 
known  that  the  present  practice  of  making  continuous  ship- 
ments in  the  sense  here  mentioned,  has  been  introduced  by 
the  voluntary  action  of  a number  of  railroad  companies  form- 
ing a continuous  line  between  the  points  of  shipment  and 
destination.  These  companies  generally  enter  into  an  agree- 
ment to  let  the  cars  of  any  one  company  run  over  the  roads 
of  the  others  for  the  purpose  of  preventing  change  of  bulk. 
They  also  enter  into  an  agreement  by  which  the  terminal 
roads,  at  the  point  from  which  the  shipment  is  made,  issue 
through  bills  of  lading,  and  assume  to  the  shippers  the  res- 
ponsibility of  delivering  the  goods  at  the  point  of  destination. 
The  terminal  road  at  the  point  of  destination  collects  the 
whole  freight  charges  and  makes  settlements  with  all  the  roads 
in  the  line,  acting  as  collector  for  them.  These  arrangements 
are  of  the  greatest  importance  to  the  commercial  community. 
In  former  times,  before  the  establishment  of  these  excellent 
through  lines,  a merchant  making  a shipment  to  points  that 
could  be  reached  only  by  passing  over  more  than  one  road, 
had  to  consign  his  goods  to  some  commission  merchant  at  the 
junction  of  the  several  roads,  who  attended  to  the  transfer  of 
the  goods.  In  many  cases  no  direct  rail  connections  existed 
between  the  different  roads;  or  if  such  connections  did  exist, 
the  shipper  might  consign  the  goods  to  the  next  carrier,  the 
responsibility  of  each  carrier  ceasing  with  the  delivery  of  the 
goods  at  the  end  of  his  line.  No  through  bills  of  lading 
were  given.  In  case  of  loss  of  the  goods,  the  shippers  had 
first  to  ascertain  on  what  particular  link  of  the  line  the  goods 
were  lost — a work  of  some  difficulty — and  when  at  last  dis- 
covered, he  had  to  bring  suit,  at  great  expense,  in  a different 


15 


State,  where  he  could  not  personally  attend  to  it,  and  in  which 
different  laws  prevailed  from  those  in  the  State  in  which  the 
shipment  originated. 

It  ought  to  be  borne  in  mind  that  the  great  improvements  in- 
troduced in  the  transportation  business  since  the  time  to  which 
I refer,  were  made  altogether  voluntarily  by  the  railroad  com- 
panies without  legal  or  any  other  constraint,  and  without  cost  to 
the  shipper.  They  were  introduced  merely  from  a desire  on  the 
part  of  the  railroad  companies  to  accommodate  the  wants  of 
trade  and  commerce,  and  by  benefiting  the  people  benefit  them- 
selves. 

The  Reagan  bill  now  assumes  for  the  first  time  that  Congress 
has  the  power  to  force  railroad  companies  to  form  through  lines, 
and  compel  them  to  make  continuous  shipments,  whether  they 
wish  to  do  so  or  not.  The  whole  bill  is  based  upon  this  falla- 
cious theory. 

The  obligation  of  a railroad  company  as  a common  carrier 
ceases  when  it  delivers  the  goods  at  the  end  of  its  own  line.  If 
it  assumes  responsibility  beyond,  and  engages  to  deliver  the 
goods  at  some  distant  points  reached  only  by  other  lines  of 
transportation,  it  no  longer  acts  in  the  capacity  of  a common 
carrier  under  its  charter  as  such,  but  simply  as  a forwarder. 
The  Supreme  Court  of  the  United  States  has  decided  [Railway 
Co.  v.  McCarthy,  Yl.  Otto,  258]  that  common  carriers  can  act  as 
forwarders,  but  they  cannot  be  forced  by  any  known  laws  to 
assume  the  responsibility  of  forwarders  against  their  own  will. 

While  Congress  has  the  right  to  regulate  commerce,  has  it  a 
right  to  say  that  the  Erie  Railroad,  for  example,  shall,  without 
compensation,  assume  the  responsibility  of  any  damage  or  de- 
struction that  may  occur  to  a shipment  of  goods  destined  to  St. 
Louis  via  the  Erie  Railroad,  while  passing  over  the  Atlantic 
and  Great  Western  Railroad  ? 

Has  it  even  a right  to  say  that  it  shall  assume  this  responsi- 
bility for  a certain  compensation  ? If  so,  what  shall  be  the 
compensation  ? Has  Congress  a right  to  order  that  the  cars  of 
the  Erie  Railroad  shall  p&ss  over  any  of  the  Western  connecting 
roads  in  order  to  make  a continuous  shipment  under  the  pro- 
vision of  the  Reagan  bill,  when  the  connecting  roads  may  not 
want  to  use  the  cars  of  the  Erie  Railroad  ? But  if  Congress  has 
the  power  to  order  the  property  of  • one  road  to  be  used  by  any 


16 


other  road,  has  it  also  the  power  to  fix  the  compensation  for  the 
use  of  that  property  ? Suppose  the  connecting  roads  do  not 
wish  to  pay  what  the  Erie  Railroad  demands  for  car  hire,  is 
Congress  to  determine  the  question  how  much  shall  be  the 
compensation  ? 

I take  for  granted  that  the  proper  answer  to  these  questions 
will  show  that  the  Reagan  bill  proposes  to  legislate  upon  a sub- 
ject for  which  there  is  no  constitutional  warrant. 

But  suppose  it  could  do  all  it  proposes  to  do,  can  it  make  a car 
built  to  run  on  a gauge  of  four  feet  eight  and  a half  inches  run 
over  a road  of  six  feet  gauge  ? Can  it  force  the  cars  of  the  Ohio 
& Mississippi  Railroad,  for  example,  to  run  over  the  Atlantic 
and  Great  Western  road?  Can  it  force  the  cars  of  the  American 
roads — the  New  York  Central,  Erie  or  Boston  and  Albany 
roads — to  run  over  the  Canada  roads  which  form  part  of  the 
through  line  between  Chicago  and  the  seaboard  and  are  not 
under  the  control  of  Congress  ? I believe  it  cannot. 

The  bill  very  properly  makes  an  exception.  Section  1 pro- 
vides that  “ no  break,  stoppage  or  interruption  * * * 

shall  be  made,  to  prevent  the  carriage  of  any  property,  unless 
such  stoppage,  interruption,  contract,  arrangement  or  under- 
standing was  made  in  good  faith  for  some  practical  and  necessary 
purpose.” 

The  cases  which  I have  just  mentioned  no  doubt  must  be 
considered  as  proper  exceptions  that  could  be  made  in  good 
faith,  but  these  very  exceptions  must  necessarily  prove  fatal  to 
the  bill.  They  nullify  the  practical  value  of  all  its  other  provi- 
sions. 

Are  the  Erie,  Atlantic  and  Great  W estern  and  Ohio  & Missis- 
sippi Railroads,  for  example,  to  be  allowed  to  carry  goods 
between  New  York  and  St.  Louis,  and  are  the  several  lines 
through  Canada,  between  New  York  and  Chicago,  allowed  to 
carry  goods  between  those  points  at  whatever  rates  they  please? 
Are  they  to  be  allowed  to  pay  rebates  and  drawbacks  and  keep 
their  tariff  a secret,  while  the  Pennsylvania  Railroad,  controlling 
lines  of  transportation  to  these  points,  exclusively  its  own, 
directly  competing  with  the  first  named  roads,  must  publish  its 
tariff  five  days  in  advance,  can  pay  no  rebates  and  drawbacks, 
but  must  adhere  strictly  to  the  published  tariff  rates  ? 

But  apart  from  the  gross  injustice  which  this  bill  would  enact 


17 


to  some  transportation  lines,  how  can  it  be  expected  that  a law 
which  exempts  some  lines  entirely  from  its  operations,  and  en- 
forces it  upon  another,  can  stop  discrimination  between  shippers. 

For  example,  under  the  operation  of  the  proposed  law,  the 
Pennsylvania  Railroad’s  business  to  St.  Louis,  is  likely  to  be 
altogther  destroyed  on  account  of  its  inability  to  compete  with 
the  lines  of  the  Erie,  Atlantic  and  Great  Western  and  Ohio  & 
Mississippi  Railroads,  to  which  the  law  does  not  apply.  The 
shippers  over  the  latter  lines,  or  over  the  Canada  Roads,  to 
which  the  law  also  does  not  apply,  can  always  have  rebates  or 
drawbacks,  and  reductions  from  the  published  rates,  while  the 
shippers  over  the  Pennsylvania  Railroad  must  pay  full  tariff 
rates.  Its  effect,  therefore,  will  be  to  create  and  enforce,  legally, 
the  very  discrimination  which  it  intends  to  abolish. 

If  one  stone  in  the  arch  is  removed  the  whole  superstructure 
resting  upon  it  must  fall  to  pieces  and  so  must  the  Reagan  bill, 
if  it  cannot  be  applied  to  all  competing  transportation  lines  alike. 

As  Congress  has  not  the  authority  to  force  railroad  companies 
to  make  continuous  shipments  as  contemplated  in  this  bill,  and 
to  act  as  forwarders  against  their  will,  the  Pennsylvania  Railroad, 
in  order  to  compete  with  its  more  fortunate  rivals  would  only 
have  to  discontinue  the  continuous  shipments,  in  which  case  the 
only  practical  effect  of  the  bill  would  be  to  deprive  the  people  in 
this  country  of  one  of  the  most  important  and  most  useful 
transportation  facilities. 

EXEMPTION  OF  WATER  LINES,  UNJUST  AS  WELL  AS  FATAL  TO 
THE  PRACTICAL  WORKING  OF  THE  BILL. 

The  next  feature  of  the  bill  to  which  I wish  to  refer  is  this — 
the  bill  exempts  from  its  operation  all  common  carriers  by 
water  routes,  and  common  carriers  part  by  water  and  part  by  rail 
routes. 

The  same  argument  and  reasons  just  named  in  regard  to  the 
injustice,  as  well  as  the  impolicy,  of  exempting  one  or  more  rail 
lines  from  the  operation  of  the  law,  apply  with  the  same  force  to 
this  exemption  of  water  lines.  If  it  be  proper  and  right  that 
common  carriers  by  rail' shall  not  discriminate  unjustly  between 
shippers  ; that  they  shall  not  pay  rebates  and  drawbacks ; that 
they  shall  publish  their  tariffs  five  days  in  advance,  why  is  it  not 

3 


18 


right  and  proper  that  common  carriers  by  water  shall  do  the 
same  ? — especially  when  railroad  companies  and  steamships  and 
canal  lines  are  competing  with  each  other,  and  when  it  is  impos- 
sible to  carry  on  fair  and  honest- competition  if  one  of  the  com- 
petitors is  to  be  bound  hand  and  foot  and  the  other  is  allowed 
to  do  as  it  pleases.  The  free  competition  between  rail  and  water 
lines  is  one  of  the  safest  regulators  of  transportation  rates  in  this 
country,  and  ought  rather  to  be  encouraged  than  prohibited. 
The  practical  effect  of  the  Reagan  bill,  if  enacted,  will  be  either 
to  break  up  continuous  shipments  or  to  drive  the  railroad  com- 
panies out  of  competition  with  water  lines  or  to  force  both  to 
combine,  which  latter  has  heretofore  not  been  the  case.  To 
explain  what  I mean : 

A railroad  company  publishes  its  tariff,  which  becomes  known 
to  the  competing  steamship  lines  end  enables  the  latter  thereby 
to  offer  secretly  a reduced  rate,  sufficiently  low  to  secure  the  bus- 
ness ; the  railroad  company  not  being  able  to  secure  any  share  of 
the  traffic  under  the  circumstances,  keeps  on  reducing  rates  un- 
til they  become  so  low  that  there  is  no  profit  to  the  steamship 
line.  The  natural  consequence  is  an  agreement  to  raise  the  rates 
and  to  divide  the  business  between  the  competitors  in  the  manner 
already  explained,  which  can  readily  be  done  without  violating  the 
provision  of  the  bill  prohibiting  pooling. 

Now,  this  may  be  a proper  solution  of  the  problem  ; but  I call 
attention  to  the  inconsistency  between  what  the  bill  proposes  to 
do  and  what  in  my  opinion  it  will  do,  and  to  show  that  whatever 
good  this  bill  could  possibly  produce  could  be  done  only  by 
indirection. 

If  the  principle  upon  which  the  Reagan  bill  is  based  is  a cor- 
rect one,  it  ought  to  be  applicable  to  all  classes  of  common  car- 
riers without  distinction ; if  this  be  not  the  case,  it  is  proof  in 
itself  that  the  principle  is  not  correct. 

TRANSPORTATION  CHARGES  MAY  BE  MORE  FOR  SHORTER  THAN 
LONGER  DISTANCES. — BY  NO  GENERAL  RULE  CAN  JUST 
AND  UNJUST  DISCRIMINATION  BE  DEFINED. 

I come  now  to  the  consideration  of  the  fourth  section  of  the 
bill  which  provides  that  it  shall  be  unlawful  to  charge  more 
for  carrying  property  lor  shorter  distances  than  for  a longer 
distance. 


19 


I have  already  shown  that  if  the  competitive  tariffs  estab- 
tablished  throughout  the  country  could  be  properly  enforced, 
there  would  be,  so  far  as  competitive  business  is  concerned,  no 
necessity  for  this  restriction. 

All  intelligent  railroad  managers  acknowledge  the  principle 
embodied  in  this  section  to  be  one  that  should  be  followed  when- 
ever a violation  of  it  would  cause  an  unjust  discrimination 
against  the  shippers  of  any  locality. 

An  examination  of  the  competitive  and  local  tariffs  of  well 
managed  roads,  will  show  that  in  most  cases  the  tariffs  are 
arranged  upon  this  principle,  but  there  are  cases  in  which  a de- 
parture from  it  does  not  unjustly  discriminate,  and  in  which 
the  enforcement  of  this  section  would  work  great  injustice  to  the 
railroad  companies.  To  prove  the  correctness  of  this  assertion, 
I will  assume  a case,  which  represents  many  that  occur  in  this 
country,  mostly  however  in  the  local  business. 


Let  A D B represent  a navigable  river,  the  places  A and 
B being  cities,  between  which  intimate  commercial  relations 
exist.  Let  C be  an  interior  town  50  miles  from  B,  and  150 
miles  from  A. 

The  cheapest  mode  of  transportation  from  A to  C before  a 
railroad  was  built,  would  be  via  river  from  A to  B and  from 
thence  by  wagon  to  C. 

Say  the  distance  by  river  from  A to  B is  300  miles,  from  B 
to  C by  turnpike  50  miles,  and  that  the  cost  of  transportation  by 


20 


river  is  half  a cent  per  ton  per  mile,  and  by  turnpike  12  cents 
per  ton  per  mile. 

To  ship  a ton  of  freight  from  A to  C would  cost  300Xic.= 
$1.50,  plus  from  B to  C=50X12=$6.00— total  cost,  $7.50.  Now 
suppose  a railroad  is  built  from  B to  C which  reduces  the  cost 
of  transportation  to  the  person  living  at  C from  twelve  cents 
per  ton  per  mile  to  three  cents,  so  that  he  can  ship  at  $8  per 
ton  from  A to  C.  Now  suppose  the  railroad  company  concludes 
to  extend  its  line  from  C to  A,  involving  the  outlay  of  a large 
amount  of  capital.  After  this  is  accomplished,  the  Beagan  bill 
prescribes  that  the  railroad  company  shall  carry  freight  from  A 
to  C at  $1.50  per  ton,  at  the  same  rate  at  which  freight  is 
carried  by  river  from  A to  B. 

The  shipper  at  the  interior  point  C,  had  always  to  pay  some- 
thing for  transportation  from  the  river  to  this  place ; when  no 
railroad  was  built,  $6.00  per  ton  ; when  the  road  was  built  from 
B to  C,  $1.50  per  ton ; and  now  since  the  capital  and  enterprise 
of  the  Railroad  Company  has  extended  the  road  from  C to  A, 
his  transportation  from  the  river  is  practically  to  be  made  free. 

If  it  be  the  object  of  the  Reagan  bill  that  no  difference  in  the 
cost  of  transportation  shall  exist,  whether  people  live  on  navig- 
able rivers,  or  in  the  interior  of  the  country,  then  Congress 
should  make  an  appropriation  for  free  transportation  from  river 
points  to  all  interior  points,  but  should  not  put  the  burden  of 
furnishing  free  transportation  upon  railroad  companies.  There 
seems  to  be  no  good  reason  for  legislation  of  this  kind,  even  if 
Congress  had  the  authority  to  determine  what  a shipper  in  cer- 
tain places  is  to  pay  for  his  freight. 

The  shipper  at  C is  fully  protected  by  the  provision  of  the 
common  law,  according  to  which  only  reasonable  rates  can  be 
charged  to  him  ; he  may  be  fully  protected  by  the  charter  of 
the  States  through  which  the  road . passes,  and  which  generally 
confine  the  railroad  charges  within  certain  limits,  and  he  is 
also  protected  by  the  low  rates  of  river  transportation,  as  he  can 
continue  to  ship  via  river  from  A to  B,  and  via  rail  from  B to  C 
at  $3  per  ton.  The  railroad  company  cannot  charge  more  for  a 
direct  shipment  from  A to  C than  this  sum,  which  is,  in  the 
assumed  case,  at  the  rate  of  2 cents  per  ton  per  mile — not  an 
extravagant  charge  considering  the  cost  of  construction  of  the 
road  through,  perhaps,  a 'mountainous  and'  sparsely  settled 
country. 


2 1 


Although  this  rate  of  $8  per  ton  for  a distance  of  150  miles, 
is  more  than  the  rate  from  A to  B via  railroad,  which  is  only 
$1.50  per  ton  for  200  miles  as  limited  by  the  river  com- 
petition, this  charge  cannot  be  considered  an  unjust  discrimina- 
tion. And  yet  the  Reagan  bill,  in  order  to  prevent  supposed 
unjust  discrimination,  proposes  to  have  Congress  determine  at 
what  rate  a railroad  company  shall  work,  regardless  of  the  cost 
to  that  company,  and  regardless  of  its  rights  which  are  conferred 
upon  it  by  the  State  laws,  and  the  rights  which  it  has  under 
the  common  law,  to  charge  a reasonable  compensation. 

RESTRICTIONS  OF  THE  BILL  TO  CAR  LOAD  SHIPMENTS  DEFEATS 

ITS  OBJECT. 

One  of  the  weakest  features  of  the  bill  is  the  one  to  which  I 
shall  allude  last.  It  is  contained  in  the  Ninth  Section,  and 
restricts  the  operation  of  the  proposed  law  to  car  loads  of  freight 
only. 

After  making  the  most  elaborate,  preparation  to  prevent 
unjust  discrimination,  this  last  provision  of  the  bill  nullifies 
completely  all  the  benefits  which  could . possibly  be  derived 
from  the  bill,  in  its  application  to  a very  large  and  important 
portion  of  the  traffic,  and  it  excludes  from  the  benefit  of  the 
bill  by  far  the  greatest  number  of  people,  and  legalizes  unjust 
discrimination  to  a greater  extent  than  it  now  exists. 

If  a merchant  has  a car  load  of  sugar  to  ship  from  New  York 
to  Chicago,  he  has  to  pay  the  published  tariff  rates,  but  if  his 
neighbor  has  half  a car  load  to  ship,  or  three  quarters  of  a car 
load  to  the  same  place,  a railroad  company  may  give  him  what- 
ever lower  rate  it  may  wish  to  make,  by  rebate  or  otherwise,  to 
secure  his  shipment.  Under  these  conditions  there  would  here- 
after be  but  few  shipments  by  car  loads. 

If  a shipper  has  to  ship  12  car  loads  from  New  York  to 
Chicago  or  from  Chicago  to  New  York,  he  could  divide  it  and 
ship  four  fifths  of  a car  load  by  each  of  the  15  routes  by 
which  freight  is  carried  between  these  two  places. 

What  necessity  would  there  be  of  a Reagan  bill  when  no  more 
car  load  shipments  would  be  made  ? No  law  can  compel  a 
shipper  to  ship  by  the  car  load  if  he  finds  it  to  his  interest  to 
ship  less  than  car  loads  at  a time. 


22 


This  peculiar  provision  of  the  bill  would  introduce  an 
entirely  new  feature  in  the  transportation  business.  It  would 
either  put  large  shippers  to  great  inconvenience  to  break  up 
their  shipments  in  less  than  car  load  lots,  and  thus  distribute 
their  shipments  over  many  lines  an  i avoid  the  restriction  of  the 
law,  or  it  would  very  unjustly  discriminate  against  the  large 
shippers  and  in  favor  of  those  who  ship  less  than  par  load  lots. 

It  is  difficult  to  conceive  what  could  have  been  the  possible 
object  of  this  provision  of  the  bill.  If  it  be  proper  and  right 
that  there  should  be  no  more  unjust  discrimination,  and  that  the 
rates  for  like  service  performed,  should  be  the  same  to  all 
persons,  then  why  should  this  bill  not  apply  to  the  shipments 
of  one  pound  of  freight  as  well  as  to  one  hundred  car  loads  ? 

There  are  other  features  ot  the  bill  which  would  operate 
very  unjustly,  but  it  will  not  be  necessary  to  refer  to  them  here. 

CONCLUSION. 

Enough  has  been  said,  I hope,  to  show  that  the  Reagan  bill 
as  it  now  stands,  if  enacted  into  a law,  could  not  be  carried  into 
practical  operation,  because  Continuous  .shipment  cannot  be 
enforced  ; but,  even  if  they  could  be,  it  would  not  remove  any 
of  the  difficulties  of  the  transportation  business  which  it  is 
intended  to  remove,  but  would  aggravate  them  all. 


23 


45th  Congress,  ^ 

3d  Session.  f 

H.  R.  3547. 

IN  THE  SENATE  OF  THE  UNITED  STATES. 
December  12,  1878. 

Read  twice  and  referred  to  the  Committee  on  Commerce. 

January  17,  1879 

Ordered  to  be  printed. 


AN  ACT 

TO  REGULATE  INTER-STATE  COMMERCE  AND  TO  PROHIBIT  UNJUST 
DISCRIMINATIONS  BY  COMMON  CARRIERS. 

Be  it  enacted  by  tbe  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled,  that  it 
shall  be  unlawful  for  any  person  or  persons  engaged  alone  or 
associated  with  others  in  the  transportation  of  property  by  rail- 
road from  one  State  or  Territory  to  or  through  one  or  more 
other  States  or  Territories  of  the  United  States,  or  through  or 
from  any  foreign  country,  directly  or  indirectly  to  charge  to  or 
receive  from  any  person  or  persons  any  greater  or  less  rate  or 
amount  of  freight,  compensation,  or  reward  than  is  charged  to 
or  received  from  any  other  person  or  persons  for  like  and  con- 
temporaneous service,  in  the  carrying,  receiving,  delivering, 
storing,  or  handling  of  the  same.  And  all  persons  engaged  as 
aforesaid  shall  furnish  without  discrimination,  the  same  facilities 
for  the  carriage,  receiving,  delivery,  storage,  and  handling  of  all 
property  of  like  character  carried  by  him  or  them,  and  shall 
perform  with  equal  expedition  the  same  kind  of  services  con- 
nected with  the  cotemporaneous  transportation  thereof  as  afore- 
said. No  break,  stoppage,  or  interruption,  nor  any  contract, 
agreement,  or  understanding,  shall  be  made  to  prevent  the 
carriage  of  any  property  from  being  and  being  treated  as  one 
continuous  carriage,  in  the  meaning  of  this  act,  from  the  place 
of  shipment  to  the  place  of  destination,  unless  such  stoppage, 
interruption,  contract,  arrangement,  or  understanding  was  made 


24 


in  good  faith  for  some  practical  and  necessary  purpose,  without 
any  intent  to'avoid  or  interrupt  such  continuous  carriage,  or  to 
evade  any  of  the  provisions  of  this  act. 

Sec.  2.  That  it  sliall  be  unlawful  for  any  person  or  persons 
engaged  in  the  transportation  of  property,  as  aforesaid,  directly 
or  indirectly  to  allow  any  rebate,  drawback,  or  other  advantage, 
in  any  form,  upon  shipments  made  or  service  rendered,  as  afore- 
said, by  him  or  them. 

Sec.  3.  That  it  shall  be  unlawful  for  any  person  or  persons 
engaged  in  the  carriage,  receiving,  storage,  or  handling  of  pro- 
perty, as  mentioned  in  the  first  section  of  this  act,  to  enter  into 
any  combination,  contract,  or  agreement,  by  changes  of  schedule, 
carriage  in  different  cars,  breaking  car  loads  into  less  than  car 
loads,  or  by  any  other  means,  with  intent  to  prevent  the  carriage 
of  such  property  from  being  continuous  from  the  place  of  ship- 
ment to  the  place  of  destination,  whether  carried  on  one  or 
several  railroads.  And  it  shall  be  unlawful  for  any  person  or 
person  carrying  property,  as  aforesaid,  to  enter  into  any  contract, 
agreement,  or  combination,  for  the  pooling  of  freights,  or  to  pool 
the  freights,  of  different  and  competing  railroads,  by  dividing 
between  them  the  aggregate  or  net  proceeds  of  the  earnings  of 
such  railroads,  or  any  portion  of  them. 

Sec.  4.  That  it  shall  be  unlawful  for  any  person  or  persons 
engaged  in  the  transportation  of  property,  as  provided  in  the 
first  section  of  this  act,  to  charge  or  receive  any  greater  com- 
pensation per  car  load  of  similar  property  for  carrying,  receiv- 
ing, storing,  forwarding,  or  handling  the  same  for  a shorter  than 
for  a longer  distance  in  one  continuous  carriage. 

Sec.  5.  That  all  persons  engaged  in  carrying  property,  as 
provided  in  the  first  section  of  this  act,  shall  adopt  and  keep 
posted  up  schedules,  which  shall  plainly  state  : 

First,  the  different  kinds  and  classes  of  property  to  be  car- 
ried ; 

Second,  the  different  places  between  which  such  property 
shall  be  carried ; 

Third,  the  rates  of  freight  and  prices  of  carriage  between 


25 


such  places,  and  for  all  services  connected  with  the  receiving, 
delivery,  loading,  unloading,  storing,  or  handling  the  same, 

Such  schedules  may  he  changed  from  time  to  time  as  herein- 
after provided.  Copies  of  such  schedules  shall  he  printed  in 
plain,  large  type,  at  least  the  size  of  ordinary  pica,  and  shall  be 
kept  plainly  posted  for  public  inspection  in  at, least  two  places 
in  every  depot  where  freights  are  received  or  delivered  ; and  no 
such  schedule  shall  be  changed  in  any  particular  except  by  the 
substitution  of  another  schedule  containing  the  specifications 
above  required,  which  substitute  schedule  shall  plainly  state  the 
time*  when  it  shall  go  into  effect,  and  copies  of  which,  printed  as 
aforesaid,  shall  be  posted  as  above  provided,  at  least  five  days 
before  the  same  shall  go  into  effect ; and  the  same  shall  remain 
in  force  until  another  schedule  shall,  as  aforesaid,  be  substituted. 
And  it  shall  be  unlawful  for  any  person  or  persons  engaged  in 
carrying  property  on  railroads  as  aforesaid,  after  thirty  days 
after  the  passage  of  this  act,  to  charge  or  receive  more  or  less 
compensation  for  the  carriage,  receiving,  delivery,  loading,  un- 
loading, handling,  or  storing  of  any  of  the  property  contem- 
plated by  the  first  section  of  this  act  than  shall  be  specified  in 
such  schedule  as  may  at  the  time  be  in  force. 

Sec.  6.  That  each  and  all  of  the  provisions  of  this  act  shall 
apply  to  all  property,  and  the  receiving,  delivery,  loading,  un- 
loading, handling,  storing,  or  carriage  of  the  same,  on  one 
actually  or  substantially  continuous  carriage,  or  as  part  of  such 
continuous  carriage,  as  provided  for  in  the  first  section  of  this 
act,  and  the  compensation  therefor,  whether  such  property  be 
carried  wholly  on  one  railroad  or  partly  on  several  railroads, 
and  whether  such  services  are  performed  or  compensation  paid 
or  received  by  or  to  one  person  alone,  or  in  connection  with 
another  or  other  persons. 

Sec.  7.  That  each  and  every  act,  matter,  or  thing  in  this  act 
declared  to  be  unlawful  is  hereby  prohibited  ; and  in  case  any 
person  or  persons,  as  defined  in  this  act,  engaged  as  aforesaid, 
shall  do,  suffer,  or  permit  to  be  done,  any  act,  matter,  or  thing 
in  this  act  prohibited  or  forbidden,  or  shall  omit  to  do  any  act,  * 
matter,  or  thing  in  this  act  required  to  be  done,  or  shall  be  guilty 
of  any  violation  of  the  provisions  of  this  act,  such  person  or  per- 

4 


26 


sons  shall  forfeit  and  pay  to  the  person  or  persons  who  may  sus- 
tain damage  thereby  a sum  equal  to  three  times  the  amount  of 
the  damages  so  sustained,  to  be  recovered  by  the  person  or 
persons  so  damaged  by  suit  in  any  district  or  circuit  court  of 
the  United  States,  where  the  person  or  persons  causing  such 
damage  can  be  found,  or  may  have  an  agent,  office,  or  place  of 
business  ; and  the  person  or  persons  so  offending  shall  for  each 
offence  forfeit  and  pay  a penalty  of  not  less  than  one  thousand 
dollars,  to  be  recovered  by  the  United  States,  by  action  in  any 
circuit  or  district  court  aforesaid,  one  half  of  such  penalty  or 
penalties,  when  collected,  to  be  paid  to  the  informer.  Any 
action  to  be  brought  as  aforesaid  to  recover  any  such  penalty  or 
damages  maybe  considered,  and  if  so  brought  shall  be  regarded 
as  a subject  of  equity  jurisdiction  and  discovery,  and  affirmative 
relief  may  be  sought  and  obtained  therein.  In  any  such  action 
so  brought  as  a case  of  equitable  cognizance,  preliminary  or  final 
injunctions  may,  without  allegation  or  proof  of  damage  to  any 
plaintiff  or  complainant,  be  granted  upon  proper  application, 
restraining,  forbidding,  and  prohibiting  the  commission  or  con- 
tinuance of  any  acts,  matters,  or  things,  within  the  terms  or 
purview  of  this  act,  prohibited  or  forbidden.  In  any  action 
aforesaid,  and  upon  any  application  for  any  injunction  above 
provided  for,  any  director,  officer,  receiver,  or  trustee  of  any  cor- 
poration or  company  aforesaid,  or  any  receiver,  trustee,  or  person 
aforesaid,  or  any  agent  of  any  such  corporation  or  company, 
receiver,  trustee,  or  person  aforesaid,  or  of  any  of  them  alone  or 
with  any  other  person  or  persons,  party  or  parties,  may  and  shall 
be  compelled  to  attend,  appear,  and  testify  and  give  evidence, 
and  no  claim  that  any  such  testimony  or  evidence  might  or 
might  tend  to  criminate  the  person  testifying  or  giving  evidence 
shall  be  of  any  avail,  but  such  evidence  or  testimony  shall  not 
be  used  as  against  such  person  on  the  trial  of  any  indictment 
against  him.  The  attendance  and  appearance  of  any  of  the 
persons  who  as  aforesaid  may  be  compelled  to  appear  or  testify, 
and  the  giving  of  the  testimony  or  evidence  by  the  same, 
respectively,  and  the  production  of  books  and  papers  thereby, 
may  and  shall  be  compelled,  the  same  as  in  the  case  of  any  other 
witness ; and  in  case  any  such  deposition  or  evidence,  or  the 
production  of  any  books  or  papers,  may  be  desired  or  required 
for  the  purpose  of  applying  for  or  sustaining  any  injunction 


27 


aforesaid,  the  same,  and  the  production  of  books  and  papers,  may 
and  shall  be  had,  taken,  and  compelled,  by  or  before  any  United 
States  commissioner,  or  in  any  manner  provided  or  to  be  pro vided 
for,  as  to  the  taking  of  other  depositions  or  evidence,  or  the  attend- 
ance of  witnesses,  or  the  production  of  other  books  or  papers,  in 
or  by  chapter  seventeen  of  title  thirteen  of  the  Revised  Statutes 
of  the  United  States.  In  actions  to  be  brought  as  aforesaid, 
damages  sustained  in  the  period  of  a month  or  part  of  a month 
may  be  regarded  as  and  counted  or  declared  upon,  or  com- 
plained of  generally,  and  as  one  separate  cause  of  action,  and  so, 
whether  such  damages  be  sustained  in  one  month  or  in  different 
months ; and  such  separate  causes  o^ction  may  be  joined  in 
the  same  action.  No  action  aforesaid  shall  be  sustained  unless 
brought  within  one  year  after  the  cause  of  action  shall  accrue. 

Sec.  8.  That  any  director  or  officer  of  any  corporation  or 
company  acting  or  engaged  as  aforesaid,  or  any  receiver  or  trus- 
tee, lessee,  or  person  acting  or  engaged  as  aforesaid,  or  any  age'nt 
of  any  such  corporation  or  company,  receiver,  trustee,  or  person 
aforesaid,  or  of  one  of  them  alone,  or  with  any  other  corpor- 
ation, company,  person,  or  party,  who  shall  directly  or  indirectly 
do,  or  cause  or  willingly  suffer  or  permit  to  be  done,  any  act, 
matter,  or  thing  in  this  act  prohibited  or  forbidden,  or  directly 
or  indirectly  aid  or  abet  therein  ; or  shall  directly  or  indirectly 
omit  or  fail  to  do  any  act,  matter  or  'thing  in  this  act  required 
to  be  done,  or  cause  or  willingly  suffer  or  permit  any  act, 
matter,  or  thing  so  directed  or  required  to  be  done  not  to  be  so 
done  ; or  shall  directly  or  indirectly  aid  or  abet  any  such  omis- 
sion or  failure ; or  shall  directly  or  indirectly  be  guilty  of  any 
infraction  of  this  act,  or  directly  or  indirectly  aid  or  abet  therein, 
shall  be  guilty  of  a misdemeanor,  and,  upon  conviction  thereof, 
shall  be  fined  not  less  than  one  thousand  dollars. 

Sec.  9.  That  nothing  in  this  act  shall  apply  to  the  carriage, 
reviving,  storage,  handling,  or  forwarding  of  property  less  than 
an  ordinary  car  load,  or  wholly  within  one  State  or  Territory, 
and  not  destined  for  carriage  in  another  State  or  Territory,  or 
going  to  or  coming  from  some  foreign  country,  or  to  property 
carried  for  the  United  States  at  lower  rates  of  freight  and  charges 
than  for  the  general  public,  or  to  the  transportation  of  articles 


28 


3 0112  105256850 


free  or  at  reduced  rates  of  freight  for  charitable  purposes,  or  to 
or  from  public  fairs  and  expositions  for  exhibition. 


Sec.  10.  That  the  words  “ person  or  persons  ” as  used  in  this 
act,  except  where  otherwise  provided,  shall  be  construed  and 
held  too  mean  person  or  persons,  officer  or  officers,  corporation 
or  corporations,  company  or  companies,  receiver  or  receivers, 
trustee  or  trustees,  lessee  or  lessees,  agent  or  agents,  or  other 
person  or  persons  acting  or  engaged  in  any  of  the  matters  and 
things  mentioned  in  this  act. 

Passed  the  House  ofEepresentatives  December  11,  1878. 


GEO.  M.  ADAMS, 

Cleric. 


Attest : 


